Investing in my own business vs real estate

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Investing in my own business vs real estate

Niko Cummings
New to Real Estate · Jacksonville, FL · Member since 2017 · 5 posts · 0 votes

Currently I’m in college and in the process of becoming a MLO. I have a connection that will allow me to smoothly transition into being a broker after 2 years (about a year after I graduate). To me, the most significant benefit of investing in real estate is the passive income. It’s a beautiful thing. However I’ve been thinking about my future business and realized that my business will generate passive income as well. If I have 5 MLO’s working under me and I’m receiving a part of their commission, that’s technically a form of passive income because I’m not doing the work.

Wouldn’t it be a better cash on cash return to just hire more MLO’s? It would cost me $1000/month for a new hire but $3,000/month of their commission would go to me. That’s a 67% return on investment.

Why would I invest in real estate when a GREAT and rare return is about 30%?

I’m genuinely asking, all help is appreciated. Thank you!

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Why not do both? Im a real estate agent and investor. I take the commissions I earn, then I buy real estate with it.

    But that is easier said than done. The failure rate for real estate agents is 87%. Thats right in line with the failure rate for most businesses being 90%.  Even of the people who make it, the average income is only about $45k.  Im in the top 1% of agents, and make a very comfortable living.  As a MLO or agent, you can certainly make a ton of money....but you got to realize that bar and far most dont/

    @Chris Mason might be able to shed light on failure rates, average pay for MLOs. Hes a great MLO out in the Bay area.

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  • Chris MasonPro Member
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    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    7y
    Originally posted by @Russell Brazil:

    @Chris Mason might be able to shed light on failure rates, average pay for MLOs. Hes a great MLO out in the Bay area.

     I have a 99% certainty that anyone focused on "if I have 5 under me in the mortgage biz..." before even being in the mortgage biz, is wasting everyone's time even talking about it. This isn't a "women's essential oils" MLM or "men's fitness protein shake" pyramid scheme. 

    Go spend a year or two putting families in homes, focused 100% on that, and nothing else, not even having the mental capacity to ask unrelated questions (you're working 70 hours a week getting your super basic-level business just barely up and running, you don't have time for such nonsense). Then, if you aren't a failure like almost everyone is, come back and talk about "what if?"

    FYI to the college kids, UC Berkeley (top public university in the nation) after eight years in the Marines was the best vacation I'd ever had. Complete vacation mode. Still can't be touched, being a college kid and getting a 3.75+ is the easiest thing you will ever do in your entire adult life, period. Think about that before you start counting eggs that aren't hatched -- NOTHING will EVER be easier than what you are doing right now. 

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